Australia welcomes foreign investment and with its highly stable regulatory environment, strong economy and skilled workforce it is an attractive destination to do business.
The Australian government and business community proactively seek investment from overseas across a range of sectors including agribusiness and food, energy, infrastructure, information and communications technology, fintech, materials and medical science and technology, resources and tourism.
The corporate tax rate
Companies that are resident for tax purpose in Australia are subject to Australian income tax on their worldwide income.
Non-resident companies are subject to Australian income tax only on their Australian-sourced income only.
A company which is resident in a country with which Australia has entered into a double taxation agreement taxation is generally limited to profits attributable to a permanent establishment in Australia which is a fixed place of business through which the business of an enterprise is wholly or partly carried on.
All companies are subject to a federal tax rate of 30% on their taxable income, excluding ‘small or medium business’ which have an aggregated turnover under $(AUD) 50 million which are subject to a reduced tax rate of 25%.
Research and development tax incentives
Australia has a strong start up ecosystem and has 15 cities in the top 1000 and has a vibrant startup scene that ranks 11th within the competitive global top 20 according to Startupblink.
The Australia government has a range of incentives and concessions for business including:
- Exploration development
- Fuel schemes
- Indirect taxations
- Innovation
- Junior minerals exploration
- Production tax
- Small business Capital gains tax concessions
- Venture capital and early stage venture capital limited partnerships
One of the most popular is the research and development tax offset which provides companies:
- with aggregated turnover of less than $20 million a refundable tax offset that is fixed at 18.5 percentage points above the company’s tax rate. If the tax offset exceeds the company’s tax liability, the balance is paid to the company in cash.
- with aggregated turnover of at least $20 million, the non-refundable tax offset will be set at the company’s tax rate plus 8.5 percentage points for research and development expenditure between 0 and 2% research and development intensity, which is the company’s expenditure on its research and development divided by it sales and 16.5 percentage points for the portion of research and development above the 2% research and development intensity.
How can FC Lawyers help?
At FC Lawyers our experienced business and corporate team has assisted corporations of all sizes to set up their Australian operations.
Contact our team today to discuss your needs.
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